Closing Bell - Closing Bell: Rollercoaster Ride On Wall St., Meta C-Suite Shake Up And Solar Stocks Slump 6/1/22

Episode Date: June 1, 2022

Another wild trading day on Wall Street with the Dow swinging nearly 700 points. The market coming off the lows of the session after a Federal Reserve report showed new signs that inflation may be easing. JPMorgan Asset Management's Phil Camporeale discusses whether that's a bullish sign for investors. Citi Private Bank Global Head Ida Liu reveals where high net worth investors are putting their money. Rosenblatt's Barton Crockett reacts to Meta COO Sheryl Sandberg stepping down. And solar stocks have had a very rough year despite huge gains for the energy sector. The CEO of Sunnova discusses how tariffs and higher commodity costs are impacting the industry.

First trading day for June shaping up to be another volatile one. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand in the market. We're coming back a little bit here. The Dow only down 121. This does not tell you the full picture. We've been down 400 today. We've been up 282 today. Some wild swings. You've got the Nasdaq outperforming. It's only down about a quarter of 1 percent and the S&P down 4 tenths. Consumer staples, financials, and healthcare are your weakest sectors right now. Take a look, in fact, at the sector heat map.

What's working today? Energy and technology for a change. Those two not usually at the top of the market, but you've got good results from Salesforce and HP fueling the tech trade. It's also helping names like Microsoft, Cisco, SolarEdge all higher today, along with energy stocks. Coming up, we will discuss the outlook for this volatile market with Ida Liu, the global head of Citi Private Bank, who has recently been named one of the most influential women in finance by Barron's. Let's kick it off with the broader

market. Major averages under pressure, losing earlier gains. Mike Santoli taking a closer look at momentum shifts in the market for his first dashboard today. What do you mean? Yeah, Sarah. Well, basically, the definition of momentum always changes based on what's been working recently. And here you see, over the last three years, the fate of momentum, which is basically what already has been the strongest stocks. Will they continue to perform well? Well, yes. strongest stocks will they continue to perform well well yes they surged off of that late 2019

low into this is of course the peak of the the growth stock uh mania and basically excitement for the tech stocks that were already very strong so you saw that huge momentum break there this is the momentum etf relative to s&p value so it's sort of momentum versus value is one of the key kind of axes that the market travels on. Now you see we're pretty much back to the lowest levels of relative performance for momentum that we've seen in a while. Well, what's going on? The momentum ETF MTUM run by MSCI and iShares has rebalances its holdings every so often. It just did so again. And here's the biggest net purchases of this ETF over the last several days. What you see is healthcare, now the biggest sector, more than doubled its weighting from January to now to 11% to 23%.

You see energy tripled its weighting and consumer staples quadrupled its weighting. And that's all together used to be these were 20%. Now all these defensive slash value sectors are more than half of the ETF. The question, Sarah, is whether they're latching on to these groups just as they've kind of realized their maximum outperformance or whether this is in fact going to be the mode of leadership for this market for a while. As you said, with today's action, only energy is really distinguishing itself as a persistent source of leadership right now. So momentum is now defensive. Exactly. And it's not working as well. Well, it hasn't worked as well. And then therefore, at those lows, it shifted into a new category of stocks, not because it hasn't worked

well, but basically they rebalanced what's wrong. Tech halved its weighting from about 34 percent to below 17. It also shows just how many people have de-risked, right? Yes, absolutely. And there's a massive whipsaw in the market in terms of what people feel like can work in this environment. Mike, stay with us if you would. We're going to have more conversation here about what to do next. Let's get the latest headlines from the Fed. The Beige Book just out an hour ago. Here's some of the highlights. First, three districts reporting price increases on goods and services have moderated. That's a sign inflation may be easing. Second, a cooling demand in residential real estate was driven by higher mortgage rates, which created affordability issues for many potential buyers. And then lastly, worker shortages continue, but there are

expectations labor market tightness could ease. Let's bring in Phil Camparelli from J.P. Morgan Asset Management and, of course, CNBC Senior Markets Commentator Mike Santoli. Phil, some changes detected in the Beige Book, which gives a lot of good color for what's happening around the country. I would also note some easing of demand as well, especially in New York, softening of demand. Do these changes have implications for the direction of stocks? Yeah. So good to be with you again, Sarah. So one of the things that we have really focused in on is that financial conditions. And when I say financial conditions, those are things like interest rates and the stock market and volatility and the dollar. Financial conditions have tightened

this year in five months as much as they did in the 18 months prior to the last time the Fed was hiking rates back in 2015. So we should be seeing stuff like this start to inflect. Now, the whole key here is whether, and you mentioned it, inflation starting to ease, is just how fast inflation will be on its way down. Some of the things that we're focused on for that in the direction of stocks is Michigan confidence. Those longer-term inflation expectations

remain very well anchored at 3%. And also the one- forward looking tips market shows inflation at about 4.7. And remember, all we know now is that CPI, the last CPI print was 8.1. So that's all people know now, but both sentiment and market indicators are showing that inflection point. Last week, we got a little bit of a blueprint of what we need for a bottoming in stocks, which is the move index, which is a measure of interest rate volatility coming down. That is really the key here.

And then today, what are we seeing? We're seeing interest rates jump and stock markets get some jitters again. Going the other way. Yeah, way too early for us to call a bottom in stocks here because of just how big the tail risks remain in a world where the Fed is tightening into slower growth. And we're also somewhat, somewhat sensitive around margins

coming in a little bit. Corporate credit remains a nice place for us to to buy some time and some yield right now in the market. And we should know, Phil, that after you came on this program a lot saying that you were still bullish on stocks, you recently did change your tune. Are you underweight now? Yeah, so slightly underweight, but not far from home, Sarah, because I think what has made people the most tense this year has been a 10-year note that has gone from 150 to 3%. So in that environment, that's caused growth stocks to massively re-rate. However, it's hard to make an argument to go massively underweight stocks at this point if what drove stocks lower was this massive jump in rates. That's priced in now. The Fed is on

their way. They're going to move 50 in June. They're going to move 50 in July. We'll see what happens towards the end of the year in the midterm elections. But we're not at the point where we want to get too far from home on stocks, just too early to go overweight right now. Corporate credit is a better place for us from a risk-re reward standpoint. But is that going to be the key, Mike, that if there are increasing signs that inflation is moderating, that's a buy for tech stocks and broader market that's been hit on fears of Fed hikes? Yeah, it should be that main element of support for the market. Yes. Now, I think we have to quibble over the Fed's definition of what convincing evidence is of a sustainable decline.

Waller said 50 basis points on the table until we get back down to 2%. And that's the key, which is that it's a multi-month period to figure that out. So you could be bullish and be correct about the fact that inflation is going to be trending lower toward target and still not really know and have confirmation, have the policy adjustment reflect that for a few months right now. So I think that's why the market's in a little bit of a tentative state. I agree. Last week, you know, went a fair distance into saying that a lot of the valuation compression, the work has been done to some degree on the downside. You have to watch, see how the path of earnings comes through. But you're not going to have that kind of all in let's grab for risk again response unless you have that.

Just one thing that's that really made me say, whoa, was the comment from Jamie Dimon. I'm sure you guys saw today. Brace yourself for a hurricane because it was back in 2015, early 2016, when the S&P was correcting. It was down 15 percent. And guess what? Diamond came in and bought stock. And that boosted confidence. Remember, we called it the diamond bottom. So to hear him say that he's downgrading from storm conditions to a hurricane fill, I don't know, it seems a little ominous. Yeah. As a Rangers fan, I thought the Rangers took care of the hurricanes last week. But this is something that we're focused on, right? Are the tail risk. And Jamie Dimon's the boss, right? I mean, he's got to really—

You can't disagree with your boss. You can't disagree. But at the same time, that's the reason, Sarah, why we're not overweight stocks here. I wish I can come on and say, this is it. Go buy stocks. But it's not yet that time because of the risk of an aggressive Fed into slowing growth. And by the way, the ECB is moving. Bank of England is moving. Bank of Japan not just yet.

This is a global story that prevents us from getting too bullish on stocks at this point. Down 87 points. Phil, Mike, thank you both very much. Mike, we'll see you in the Market Zone. And tomorrow, a lot more talk about the Fed and its next policy move. We've got an exclusive interview

with the Fed Vice Chair, Lael Brainard. It's her first interview since winning Senate confirmation for that role. 10 a.m. tomorrow on Squawk on the Street. Do not miss it. It's been a rough six months for Sunova, which has significantly underperformed the rest of the solar industry, which has also had a rough few months. Up next, Sunova's CEO outlines his strategy for turning that stock around. You're watching Closing Bell on CNBC. Continuing to improve here, communication services just joining tech and energy in the green.

There's the stealth mover of the day. It's Tempur-Sealy. Piper Sandler downgrading the mattress maker to neutral from overweight, cutting its price target on the stock to $28 from 36, citing disappointing sales over Memorial Day weekend. The stock down 5.4 percent. Energy prices are soaring from oil to natural gas to electricity. That should be good news

for players in the solar space, as those higher costs will help hold on to existing customers and entice new ones. But shares of Sunova, Sunrun, First Solar, they're all down double digits this year. Joining us now is Sunova CEO John Berger. John, welcome to the show. What accounts for the underperformance, given the fact that we are seeing electricity and gas and oil prices so elevated? Thanks for having me, Sarah. Really, I think it's just really a misunderstanding by the market about the fundamentals of this business. We are an energy company and our competitors are energy companies. You just said natural gas is soaring, oil is soaring, and everything that we do is moving up and to the right. And so,

for instance, we had our biggest day in sales in our company's history just yesterday. So everything is moving in the positive direction. You just got to get the word out in the markets. We're an energy company. We're not an internet company or a tech company. Just yesterday. Well, thank you for breaking that news on our show, John. So why is that? Why are you having record-breaking sales right now? The single best thing that a consumer can do in this economy is to sign up for solar service from a company like ours. You can lock in energy prices for the next 25 years. We all know and seen that utility rates are skyrocketing. They're going to keep moving up as we move forward in the course of the year and then even after that, in our opinion. And so you can lock those rates in.

But here's the other thing. Now with electric vehicles, you can even lock in the gasoline at their pump. That's all going up, as you just said. And we continue to be very bullish that the price of crude oil and gasoline and diesel are going to continue to move up as well. So this is the best thing you can do as a consumer. Consumers are flocking into our space and we're trying to get that service set up for each homeowner across the United States as fast as we can. But, John, aren't your prices rising as well? You've faced raw material inflation and other supply chain issues, haven't you? We have. And we've had a cost of capital. Of course, everything's moved up with the 10-year Treasury and the rest of the bond market moving up in cost. And then some of the equipment's

moved up in cost, although that's kind of flatlined a little bit here recently. Some of the tariffs and some of the things that have been done by the administration has not been helpful. But with that said, we've been able to raise price again as recently as the last few days increasingly to make up for those higher costs. And we're going to continue to do so as we move forward in time. So if you're a homeowner looking to get away from and have some relief from these very, very high and getting higher utility bills and the prices at the pump, I get signed up fairly quick here. What is going on on the tariffs? Because I feel like the Biden administration was supposed to be your best friend and there was the Build Back Better plan and then all the subsidies and none of that has happened. And instead, you've got these tariffs on Chinese solar companies, which, as I understand it,

is crushing your industry. So can you just explain what's happened there? Yeah, there's a big difference, Sarah, between the utility scale solar and what we do with solar behind the meter, so to speak, for homeowners. And to be clear about it, we are somewhat sheltered from some of that tariff issues, but not entirely. But we've got an ample amount of supply of panels currently. Very disappointing in what's happened. You couldn't have predicted it. But certainly getting involved in putting tariffs in place, and tariffs have never worked in any government in any time in human history. But we seem to keep trying them, including the previous administration, of course,

and it's been a continuation with the Biden administration on this. They're a complete failure. They're not working at all. And we need to get away from them and we need to get the policies put in place so that consumers can choose. And that's the interesting thing about solar. And look at what Governor DeSantis did in Florida just a few days ago. He went on the side of solar and said, I'm not going to raise utility bills on Floridians, and I'm not going to take away the only competition Floridians have to these high utility bills, which is solar. So we've got to get government out of the way. Solar for your home is pro-competition, it's pro-consumer, it's pro-capitalism, and it's certainly something that is much more pro-consumer than a monopolistic utility

who just has nothing else better to do than continue to raise rates as far as the eye can see. I never thought I would hear a solar CEO praise DeSantis and bash the Biden administration. You think about it the other way around when it comes to the renewable industry. People often do, but I'm sitting here in Houston, Texas, and I can tell you this, that solar is pro-market, is pro-consumer, and it's something that we've got to continuously get the message out there that this is something that's good just solar. It's electric vehicles. It's batteries. There's a whole lot of things that are going on here that can give people relief to these high utility bills and these high gas prices. But we've got to get government out of the way. And Governor DeSantis made a big move in that in that direction. Now, John, quite a statement. Thank you for joining us. Thanks for having me. Market likes it. Stocks up more than a percent. John Berger of Sanova. It's going to be check of the overall market. Down about 74 points on the Dow.

S&P down about a quarter of 1%. You've seen a few groups turn green in just the last few minutes. Utilities now joining communication services, technology, and energy at the top of the market today. Staples, financials, and health care still at the bottom. The Nasdaq outperforms. It's actually about to go positive. You've got strength in some of the mega cap techs. There was weakness yesterday. Amazon's up again today, another two and a half percent on top of a five percent gain

yesterday ahead of the stock split later. DataDog, some of the beamed down cloud names, Okta, all higher. Still ahead, the global head of Citi Private Bank, Ida Liu, on whether her clients are starting to buy back into this market after a pretty rough start to the year. As we head to break, check out some of today's top search tickers on CNBC.com. Ten-year treasury note yield once again takes the top spot, followed by Salesforce, an earnings winner. Amazon, which I mentioned up again. Tesla, which is lower by 1.5 percent. And the S&P 500, which is down about a quarter percent as we head into the close. We'll be right back. What is Wall Street buzzing about today? Pride Month kicking off to celebrate the LGBTQ community.

Many communities and companies on Wall Street are sponsoring large pride events, but it turns out they are also donating millions of dollars to state lawmakers behind those controversial laws, such as the so-called Don't Say Gay bills. Ilan Moy, with the details and a little hypocrisy, Ilan. Yeah, Sarah, celebrating pride shouldn't just be a branding opportunity. At least that's the message from the progressive think tank Data for Progress after they looked at political donations by the biggest companies in America. It found that Fortune 500 companies and related PACs have contributed $2.8 million to politicians in six states who backed don't say gay bills or measures restricting transgender health care.

Many of those same companies are sponsoring pride events across the country, including AT&T, State Farm, FedEx, Amazon and our own parent company, Comcast. Now, FedEx, Amazon and Comcast did not comment. AT&T said it also donates to lawmakers who support gay rights. State Farm said it doesn't contribute to any politicians, but its employees can. However, Data for Progress said that polling shows corporate reputation does take a hit when political giving doesn't match pride messaging. Sarah? I feel like it's sort of a new issue for companies to have to go see where they're giving ever since the Disney blow up. And that really is what called a lot of attention to this. Maybe they just have to play catch up here. Yeah, that's right. I think the political risk is real on both sides. So you

saw what happened in Florida when Disney came out against the don't say gay bill. Republicans there took away some of those special privileges that Disney had enjoyed. But the left also saying, hey, we're looking at your political donations as well. And if you don't live up to your messaging, there is a risk that your consumers and your customers might leave. Also very notable, Sarah, that the Seattle Pride Parade group actually severed ties with Amazon because of its political donations. So these groups are hitting them at their bottom line and also in their hometowns. Ilan Moy, pretty interesting. Thank you. Up next, Citigroup, private bank global head Ida Liu tells us where her clients are putting their money to work in this volatile environment as

stocks pull back for a second straight day. Dow down about 53 points. Some resilience, as Jim Cramer just noted. Resilience late in the afternoon here is bullish. We'll see if it holds. We'll be right back. It's been another volatile up and down session here in Wall Street. Markets in the red as we head into the close, though, off the worst levels of the session. Joining us here at Post 9, Ida Liu, the global head for Citigroup Private Bank. She was recently named one of the most influential women in U.S. finance by Barron's. Welcome, Ida. Thank you so much. It's great to be on with you, Sarah.

So you oversee billions of dollars from private, wealthy people. I do. What is the level, would you say, of nervousness or bearishness from your clients right now? Well, investors are all very much concerned about the three R's. That's Russia, rates, and a potential recession. So we are making sure that we are making strategic allocations in the client's portfolios

to reflect some of our views around that. So for example, in investors' portfolios, you're seeing quite a high level of cash balances. How high? Somewhere between 15%, 25%. And when you think about the fact that inflation is at 8.3%, 40-year highs, you're making next to zero on those deposits. You're making a negative return on your cash balances. So we think that there is an opportunity to add some value there by looking at fixed income.

We do think bonds are back. Just look at the 10-year Treasury. It's doubled since the beginning of this year at 3%. And municipals for U.S. taxpayers are yielding a triple tax equivalent yield of over 7%. So those are really interesting yield enhancement opportunities to add and replace cash in clients' portfolios. So you're telling them, instead of go to cash, since you're bearish and since you're worried about recession, go into bonds. And yes, we have seen bonds come back a little bit, but I don't know, the last few days they've sold off

and 10 years back near 3%. Yeah, well, they've sold off. However, we look at the yields on very high quality bonds like municipals. And as I said, an intermediate portfolio yielding over 7% is very, very attractive, something that you should absolutely be considering as a cash alternative. In addition to that, if you look at your equities exposures, we really like some industries like healthcare. We like healthcare. We continue to like healthcare. It's defensive. It's value-oriented, very high dividend paying. We like certain sectors in health care, specifically if you look at drug discovery and what we've just been through the pandemic. I think there's some really interesting plays there. Telemedicine, personalized medicine,

a lot of opportunities in the health care space. Couple that with commodities as a geopolitical hedge in the portfolio is important as well. And then lastly, I would say technology, specifically cyber, is going to continue to be an area that companies invest in, continue to invest in, as everybody's thinking about security for their companies going forward. So we think cyber is going to be another interesting play and something that should be added strategically into clients' portfolios as well. Not software, not some of the other sexier parts of technology, which have really gotten beaten up here. Yeah, they've gotten of the other sexier parts of technology, which have really gotten beaten up here. Yeah, they've gotten beaten up. But we do like cyber. We like AI.

We like some of those themes that are going to be really driving a lot of future growth. And you think commodities still have room? We've already seen such a tremendous move. Yeah, we still think commodities have room. And we think there's a place for that in clients' portfolios to help hedge, as I said, some of the geopolitical risks that we're seeing around the world. Are you growing the business right now in this kind of volatile environment? Do people want more advisory work or is it the opposite? Oh, Sarah, that's where we add the most value is in markets like this, right? We've had a 10-year bull market. It's starting to become a little bit choppy and volatile. That's where we add the most value because we are fiduciaries for our clients. We help them build lasting portfolios that really withstand many decades, many generations for their families, for their kids, for their grandkids.

So it's really helping them be prudent fiduciary managers and a very well diversified asset allocation for our clients and their families. You used to run the North American business. Now you're doing the global business. Where is the most growth happening as far as those very wealthy family businesses that need you to manage their money? Well, we see growth in pockets globally. Obviously, we're the most global private bank in the world. We just opened our France and Germany offices, so 20 countries around the world, 52 cities. And obviously, we still see lots of pockets of growth in Europe, in Asia, Latin America, and North America, as evidenced by our global footprint. So the wealthy are global, and we continue to invest in regions where we see a lot of the

growth opportunities. Do you see different risk tolerances in different parts of the world right now, or is it pretty much everyone's cautious? It's really dependent on families and their specific views. We have some that are very risk-averse and some that are very risk-tolerant. So, you know, it just depends. It depends. Are you telling them to brace for a recession? Well, you know, we're hoping that there's going to be a softer landing.

We think there's about 200 more basis points of rate hikes ahead. And let's see if there's a softer landing. We did have a 1.4% decline in GDP last quarter. We're still estimating that we're going to end the year closer to 2% growth. And we're hoping for a softer landing. We're factoring in a probability of about a third for recession early next year. What about when to buy? What sort of things do you look for when you tell them, okay, time to get out of defensive mode and take advantage of some of the opportunities out there? What do we need to see? Yeah. So, Sarah, I think one of the most important things that we all know, being fiduciary

asset managers, is you can never time the market. Okay. Let's not forget that pre-pandemic levels were still up almost 30% in the markets, even though we've had this decline year to date, 15% hit to the S&P. But that doesn't mean that we completely course correct. Right. We make adjustments, as I talked about earlier, with some of the tactical moves that I was mentioning with some fixed income additions, some of the industries that we were talking about as well. And one other area that I would mention to you is alternatives. I think alternatives are a very attractive place. Private equity? Yeah, private equity, hedge funds, direct investments and co-investment deals that we do for family offices around the world. Very attractive opportunities there, particularly as investors

are willing to pay that illiquidity premium in markets like this where it's harder to find those types of returns and yields. It gets you out of the day-to-day swings as well, which I would think is very appealing. Ida, thank you. It's great to talk to you. It's great to be with you, Sarah. Thank you for having me. Ida Liu is the head of private wealth at Citigroup globally. And a programming note, don't miss an exclusive interview. More on the markets and the Fed and these interest rate hikes with Federal Reserve Vice Chair Lael Brainard. Her first interview since being named Vice Chair of the Federal Reserve tomorrow, 10 a.m. Eastern on Squawk on the Street.

Here's where we stand right now, heading into the close. We've just dipped a.m. Eastern on Squawk on the Street. Here's where we stand right now. Heading into the close, we've just dipped a little bit lower, down 90 points on the Dow. S&P is down about four-tenths of 1%. Technology and energy are still hanging in there. Energy is up 2%. Utility is also green, but everything else is lower. Banks and staples are really the hardest hit. They're down more than 1%.

J.P. Morgan CEO, speaking of the banks, Jamie Dimon warning investors to brace for an economic hurricane. Details of that dire outlook straight ahead. Breaking news, big C-suite change at Meta. Julia Borsten with the details. Julia. Sheryl Sandberg, who has been the longtime COO of Meta, the company formerly known as Facebook, announcing that she is leaving the company. She's announcing this in a very long post on Facebook. Sheryl Sandberg writes in this long post on Facebook that sitting by Mark Zuckerberg's side for these 14 years has been an honor and a privilege of a lifetime.

She talks about working with Mark over the years, calling him a true visionary and a caring leader. She talks about how she expected this to be a five-year-old, did not expect to stay there for 14 years. And she goes on and on and talks about all the different people she had the privilege of working there. And then she talks in many ways about what she's so proud of in terms of what the company has accomplished. But she says in terms of her future and why she's leaving, she says, I'm not entirely sure what the future will bring, but I know it will include focusing more on my foundation and philanthropic work, which is more important to me than ever, given how critical this moment is for women. She talks about how she's getting married this summer and parenting their expanded family of five children will be in focus. She says over

the next few months, Mark and I will transition my direct reports and I will leave this company, the company this fall. I still believe as strongly as ever in our mission. And I'm honored that I will continue to serve on Metta's board of directors. Um, so lots of thanks, um, lots of, uh, commitments to, to working with Mark Zuckerberg as they transition in the next coming months. But Sheryl Sandberg will be staying on Meta's board and working with Zuckerberg in the transition to replace her effectively before she leaves in the fall. Guys, back over to you. So, Julia, I'm just watching the stock price. It did take a dip lower on that news, stock down about 3 percent.

Right now it's coming back a little bit, But there you can see when the news hit. Any indication, it doesn't sound like there's any indication that this is coming about as a result of some of the pretty massive changes we're seeing inside Facebook, not just changing its name to Meta, but its focus to the Metaverse and also a big focus to video after it's losing share to places like TikTok. And Wall Street has been frustrated or investors have been frustrated with the performance over the last few quarters. Well, I think there's been a massive slowdown in growth, Sarah. There's no question that's what the stock price reveals and also questions about how the company's going to manage this transition to focusing on the metaverse, how long it'll take to be generating revenue from that. In her very long post here,

it seems like it's not about that. She's trying to indicate that she's proud of what she accomplished and stayed longer than she expected and wants to stick around to help for this transition. But, you know, Sheryl Sandberg was and continues to be really the business mind here at Facebook. And the way she and Mark Zuckerberg collaborated, they were known to have this partnership where he very much focused on the product. She focused on the business and monetization. She came on CNBC many times and did interviews with me and talked about the advertising business and making sure they were building a sustainable business operation there. So it seems based on her commentary that this is something she's been thinking about for a while. But this is certainly a company in transition. We've seen a lot of turnover in the top management

role. So certainly this is the highest profile person to be leaving the company. Right. Well, she also had some of the government political chops as well, having worked for former Treasury Secretary Larry Summers. She was the chief of staff. Mike, implications for the stock and in general, how how Meta has held up during the bout of recent volatility? It was surprising to me that sort of machines sold that headline pretty hard. The stock went down four percent on the headline. It seems like with the fleshing out of the rationale and a bit of the color around it, it's recovering some of that. Fourteen years, just in the abstract, is a really long time to have a top two job at one of these massive companies. There's a way to paint this last year.

But it was the best of times for Facebook. Right. And this is the hard part. And we're into the hard part, long into it, not just for meta, for all these companies. Look, Bezos left in the last year. Musk seems to want to do some things other than Twitter. Dorsey's gone from Twitter. So it does seem as if there's this generation of tech leaders and founders that are saying, you know, maybe the easy part's over. Let's figure out what I want to do. But it seems a fairly personal decision.

She was considered to be, you know, a good set of managerial hands from the business side at the top of Meta. But I'm not sure if right now that's really the swing factor for this stock. Well, Mark Zuckerberg's leadership hasn't really been in question, right? He still has control. No, exactly. He has control. Voting control.

Voting control. And, you know, unless something major happens, that's going to be the case for a long time. Julia, thank you. And Mike as well. With MetaShares recovering a little, but still down 2.6%. Take a look at DeltaShares, grounded despite raising its revenue forecast. The carrier CEO weighing in on that improving outlook straight ahead. That story plus a rough day for buy now, pay later stocks in particular.

We'll hit that when we take you inside the market zone. Dow down 35. We'll be right back. We are now in the closing bell market zone. CNBC Senior Markets commentator Mike Santoli here to break down these crucial moments of the trading day. Plus, Rosenblatt, Barton Crockett on Meta's big C-suite shakeup just announced moments ago. And Philip Oh also on Delta. We'll start off with the volatile day for stocks again.

Just another 700-point swing from low to high. Stocks are climbing a little bit here into the close, but major averages are still in the red. The Dow down more than 400 points at the low of the day, up almost 300 at the high. Now down about 38 points or so. Salesforce is doing really well in the Dow, and it's the best-performing stock on the S&P after better earnings last night. Mike, second day in a row where we've seen some resilience into the close. What does that tell you after the 6.6 percent gain for stocks last week? Yeah, that to me is the main inference here is, yeah, most stocks are down again today as they were yesterday, but it's

mostly digesting a very big move off the lows from from May 20th. Both days, the market seemed to decline a chance to really get some downside momentum going at the lows from May 20th. Both days, the market seemed to decline a chance to really get some downside momentum going at the lows of more than 1%, you know, below the prior close. So you don't want to make too much of it, but it seems as if a little bit of stability has filtered back into the tape for now. Energy also popping 2%,

more than the underlying commodity, with oil prices just higher by about 0.4%. Take a look at shares of Meta. They sunk after Sheryl Sandberg just announced that she will be stepping down as COO this fall. Coming back a little bit here, let's bring in Rosenblatt Securities Senior Analyst Barton Crockett. There's Meta down 2.8 percent. Barton, right reaction for Sheryl Sandberg leaving? Right. I mean, this is the definition of instant reaction, because I'm just hearing about it. But, you know, Sheryl Sandberg has clearly been one of the key executives, the key architects of Meta's success. You know, her departure takes away someone who I think was a

real bright shining light on ad sales and the strategic approach. So, you know, in that way, it's a loss. But I think that, you know, on a personal level, you know, I think her husband passed away. First husband passed away. She's getting married again. We've been through a pandemic. The business is going through a big transition. So at a personal level, I think it's very understandable. That's a company that's filled with talent. You know, so I expect that she'll be replaced. But, you know, I understand a little bit of uncertainty because she's been a very strong executive for them. How are you thinking about Meta right now, given that it is in the middle of so many transitions and the market has really turned on names like this? Right. Well, you know, I have a neutral rating on Meta. I launched

with a neutral rating on April 19th, along with the broader group. And, you know, I am concerned about the slowdown in the top line. I am concerned about the macro headwinds. I'm concerned about the privacy changes. I'm concerned about the spending on the transition to metaverse, which I'm not really a believer that we generate a return on that that's investable. So I've been cautious. You know, the stock's been, you know, I think supportive of that stance. Yeah, yeah. And, you know, at some point, we'll look for for the fundamentals to kind of stabilize one would hope. But the biggest issue that they have is that they're losing, I think, audience on Facebook, the platform, the signature platform.

Not clear that that transitions generationally. So, you know, they've got some issues. And, you know, my stance has been that I don't want to, like, run into that, even though I know there's a lot of fans out there. But, you know, I'm not among them today. Is leadership an issue? You mentioned they have a bench of talent. Is that still the case, as we have seen, the sort of shifting winds of winners and losers in Silicon Valley? They still have a deep bench? Well, you talk to advertisers, and they'll tell you that, you know, Facebook is really strong in advertising, really strong in ad tech. They do have a controlling shareholder, obviously, Mark Zuckerberg. So I think the strategic choices,

like the expansive kind of investment in metaverse and some of the combative stances around privacy and their stance with Apple, that's where you could question, I think, some of the choices. But it's kind of like whistling in the wind. It's not going to change. Below the Zuckerberg level, leadership in ad tech has been very strong. Julia Borsten, a reporter covering the story, joins us, Julia, with some more color. What else have you learned? Well, in Mark Zuckerberg's Facebook post about Sheryl Sandberg leaving, Zuckerberg thanks Sheryl Sandberg extensively, but he also lays out the new management structure and a little bit of a reorganization of how the executive ranks are

going to work here. He specifically appoints a new COO. It's Javier Olivan, but this is going to be a different kind of COO role. Zuckerberg says that Sheryl has built an amazing legacy with Nick Clegg and Jennifer Neustadt as chief legal officer. But he also says, I don't plan to replace Sheryl's role in our existing structure because she defined the COO role in her own way. He also says, Meta has reached the point where it makes sense for our product and business groups to be more closely integrated rather than having all the product and business, all the business and operations functions organized separately from our products. So he lays out here in this post on Facebook the different ways he's going to have the chief business officer report to the CEO, Javier Olivan, so the ads and business platform groups will be

closer to the meta-business group. So this is interesting, Sarah, because this is a company that's trying to reconcile the different parts of its business as it works towards that metaverse future and also struggles with slowing revenue growth. Julia, thank you. Barton Crockett, real-time reaction to the shakeup sort of in the way that he's realigning the executives to match the different businesses. It is a little different. Yeah, it is a little different. And, you know, I think it does certainly sound consistent with the change in business focus for there to be a change in management structure. You know, I think that this is an opportunity, a challenge to the business, a slowdown, a strategic pivot where, you know, Zuckerberg sits back and rethinks, how do I want to run this? Who do I

want as my team? Who's in for the tough fight ahead? And I think that's what we're seeing is the fruits of that internal kind of analysis and thought process that Zuckerberg's going through. Where are investors, Barton, that you talk to, your clients, where are they on the metaverse and meta? You know, there was a lot of hype for it a few months ago, but then the Fed started raising rates and a lot of air came out of these stocks, especially meta, on some rough quarters. So how much of tolerance does Wall Street have for this project, which is costing billions of dollars and changing the entire focus of the company away from the traditional model of

ad sales on Facebook. Right, right. It's very interesting. I mean, I talk to people who are believers. You know, I'm on the more skeptical side of, you know, who I talk to. But the stock acts like, you know, my view is more dominant than what I hear from clients. I do think that, you know, what, you know, what I think this will come down to is just some tangible proof that they're doing something that you can look at and put some earnings on. And I think that the view

on these type of explorative adventures from all kinds of companies is kind of be sharpened and more skeptical as interest rates rise, as the environment toughens, if we're moving into a slower economy, less forgiving of exploratory type of endeavors like this. Now, to their credit, to his credit, Zuckerberg's rolling back spending, he's spending less on metaverse than he initially signaled in reaction to the toughening business environment. And I

think that helps people's comfort that things are at a responsible professional level. But, you know, I still have yet to see the business case that says that you can invest X and get Y that would make me want to get behind it. Well, not alone. It is the second worst performing communication services stock of the year, number one being Netflix. I was going to ask what you like better than Facebook, because clearly you're not too hot on it. And whether Amazon was in there, it's up again today, 1.3 percent, had a big run yesterday. But I'm looking at your note, doesn't look like you're too hot on that one as well. I guess the stock split coming up, I don't know if that's a catalyst. It shouldn't really mean anything different for the stock. What's your case there? Okay. So, you know, for Amazon, I'm also at a neutral. The only large cap internet stock that

I'm recommending right now is Alphabet. You know, I think that Alphabet is very purely exposed to strength, secular strengths in internet without the noise that we see in the other names. So at Meta, noise is metaverse. Noise is the slowdown in growth. At Amazon, the noise is the slowdown in retail. You know, the retail business top line is no longer outperforming, and it hasn't been for the past couple of quarters. And that raises questions about the competitive changes that have been built as the big box retailers have improved click and brick,

as a consumer rotates to services, what does that mean? And the cost pressures and the investment in capacity that really didn't pay off. The idea was build it and they will come from the pandemic at Amazon, they haven't come. Web services on the other hand is great. And I think Salesforce's data points are supportive of a constructive view on cloud, which I think has

helped Amazon recently. But the stock's down 22% since I launched. The S&P is down 8%. So it's been OK to be on the sidelines for now on Amazon. Yeah, it looks like you like Google better than both with a target of 41.18 at the shareholder day today. That stock is higher, but is also down at least 20 percent from the highs as well for the year. Barton, we've got to leave it there. Thank you very much for joining us, especially on bearing with us on that breaking news on Meta and weighing in in real time. Mike, just as you talked about the resilience, we've taken a leg lower here. Nothing extreme, but down 150 on the Dow. Salesforce by itself adding about 100 points. And then there's Chevron

and some of the energy names doing well. But we're losing a little momentum here. What are you watching? Yeah, down another half percent or so on the S&P, a little more than that. That's about where we were down yesterday, too. So you've given back kind of 1 percent of a 9 percent rally right now. Still in the normal range of what you'd expect for digestion, but obviously things are delicate because we're not all that far from those desperate lows just, you know, 11 or 12 days ago. Advancing volume is only about, you know, half of declining volume.

So that shows you there has been a skewed weakness in breadth. Take a look at the two-year Treasury note yield. It is back on the upswing. It's not at the highs for the year, but we had gotten some relief on this. And the market implicitly took a rate hike out of the expectations for the out months and now it's sort of building it back in there with some somewhat more assertive or hawkish fed rhetoric i think there's still a majority implied chance of a half percent increase in september as well as june and july at this point so we'll see how that tracks so far the nasdaq

handling it okay volatility index has eased back. Relatively narrow range today. We're kind of hovering in this mid-20s area. You're seeing it sort of almost creating a bit of a floor around 25 on that chart. We'll see if that holds for a while, but have not made a new low back down near 20 since almost April, Sarah. As we head into the close, first day of the month of June kicks off with more selling. Nothing extreme. And it's certainly calmer than we saw earlier in the session. But we are down about seven-tenths of a percent on the S&P, which means for the week, as Mike said, down 1.3 percent. We're about 15 percent off the highs for the S&P 500.

The Nasdaq's actually holding up a little bit better today. That's thanks to some strong earnings from the likes of Salesforce, which, as you just heard, helps the cloud companies. Perhaps one of the reasons Amazon is strong again today. But you're seeing strength in names like T-Mobile, Match, Electronic Arts, a number of the tech names today helping the NASDAQ. The Russell 2000 index of small caps also faring a little bit better. Just wanted to point that out down about less than half a percent. Overall, the Dow down half a percent, 167 into the close. The S&P 500 losing three quarters of one percent. The only sector to finish green, energy, up two percent. That does it for Closing Bell. Have a great evening, everyone.